Mid-Atlantic Dealer News - May 2023

The official magazine of the MIDATLANTIC INDEPENDENT AUTO DEALERS ASSOCIATION

PENNSYLVANIA • MARYLAND • DELAWARE

1501 North Front St., Harrisburg, PA 17102 (717) 238-9002 midatlanticautodealersunited.org

Noah Melamed - Chairman Ticket to Ride Auto, Lancaster, PA nmelamed@yourttr.com

Chris Smiley - Advisor Mountville Motor Sales, Columbia, PA rcsmiley@comcast.net

Bert Straub, President 1st Choice Auto LLC, Fairview, PA bertcstraub@gmail.com

Vacant, President - Elect

John DeFilippo - Treasurer DeFilippo Bros. Motorcars, Prospect Park, PA john.m.defilippo@gmail.com

Clint Weaver- Secretary America’s Auto Auction Harrisburg, Mechanicsburg, PA clint.weaver@americasautoauction.com

Tom Hodges, Vice-President Tom Hodges Auto Sales, Hollywood, MD tom@tomhodgesauto.com

Dan Limongelli, Vice-President Jo Dan Motors, Plains, PA jodanmotors@gmail.com

Michael Mansour, Vice-President Car Connection, Inc., New Castle, PA mike@carconnection1.com

Beth Melamed, Vice-President Ticket to Ride Auto, Lancaster, PA bmelamed@yourttr.com

Tom Brandis • tombrandis@netscape.net Advantage Auto Sales & Credit, Quakertown, PA

Lisa Cohowicz • lisac@nepautoauction.com North East Pennsylvania A/A, Scranton, PA

Jeff Dreier • dreierauto@hotmail.com

Dreier Auto Sales, Shavertown, PA

April Hollobaugh • ajautosalestitusville@gmail.com A&J Auto Sales, Titusville, PA

Kevin Luring • k.luring@yahoo.com ADESA PA, York, PA

James Makia • james@exclusivemotorcarsmd.com Exclusive Motorcars, Randallstown, MD

Dan McNamee • dtlcars@aol.com

Daniel Thomas Auto Sales, Croydon, PA

Gregg Pachik • gregg.pachik@manheim.com

Manheim Philadelphia, Hatfield, PA

Kerri Rotunda • kerrir@corryade.com

Corry Auto Dealers Exchange, Corry, PA

George Smouse • gasmouse@zoominternet.net

Smouse Trucks & Vans, Mt. Pleasant, PA

Steve Worley • worleymotors@hotmail.com

Worley Motors, Enola, PA

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Email heather@piada.org

Copyright 2023

4 | NIADA to Hold

BHPH Underwriting Workshop

In the current market, a strong underwriting process is critical for buyhere, pay-here or lease-here, pay-here businesses.

8 | Retaining Top Talent in Your Car Dealership

It is a critical issue for car dealerships since they face challenges in retaining their employees due to the competitive nature of the industry and the high demand for skilled workers.

10 | Report Estimates 153K

Catalytic Converter Thefts

CARFAX reports there were approximately 153,000 thefts of catalytic converters throughout 2022.

10 | The MidAtlantic Regional Independent Automobile Dealers Association Conference Returns on September 24-26 at Caesar’s in Atlantic City. Look for more details soon!

11 |

Rev Up Your Dealership’s Community Engagement

To truly engage with their communities, independent dealers must go above and beyond by actively participating in community events and initiatives, providing valuable resources and support, and creating a welcoming environment.

18 |

NICB Reports Vehicle Theft on the Rise

From auto theft to widespread swiping of catalytic converters, the challenges for businesses have been daunting.

20 |

Access to Auto Credit Tightens

According to Cox Automotive’s preliminary data on auto credit access from the first half of March released in a recent Auto Market Weekly Summary, there was “the widening of yield spreads and shortening of terms.”

BERT STRAUB, PRESIDENT MIDATLANTIC REGIONAL IADA MANAGER, 1ST CHOICE AUTO, LLC FAIRVIEW, PA

Reflections

That was fast; tax season came and went in the blink of an eye. Spring is here. As I recount my last month's reports, I continually want to reflect on them. What could I have done differently? What do you think I could do better? What should I stop doing? I don't know about you, but simple things pop into my head at the oddest times. As I was making a breakfast omelet, I thought, wow, it would be elegant to have fresh Parmesan cheese grated on top of it, so I grabbed the old cheese grater, a new block of cheese, and started to shred some on top of it thinking quickly. Wow, they called these things knuckle busters for a reason. Instantly, I did it - a whack. Ouch, that hurt. I busted the knuckle open on the cheese grater. Why is it?

We know what will happen, yet we continue to push through and think, now, this time, it'll be different. What does this have to do with business? What are you doing consistently the same? Knowing there is a better way, I will still stay the same. It's how I've always been going to do it, even though I know the result is that I will have to put a Band-Aid on my knuckle. Well, I'm here to tell you we can help. Do us a favor and save the dates of September 24 - 26 at Caesars Atlantic City, which is your 2023 convention this year. I can't promise it'll stop you from doing silly things.

I can promise the resources to figure out how to stop the bleeding on a few of your issues. We are currently lining up vendors and speakers to make this an excellent convention for everyone, so stay tuned for more information. We've also started to launch our new CPO program, and from what I hear, we already have a few dealers signed up and ready to be active. In our compliance corner, please be sure to update your dealer's license. If you have any questions, please contact the office so we can guide you. As always, if you have any questions or concerns, don't hesitate to get in touch with me personally; I will do my best to help. n

WHAT ARE NIADA 20 GROUPS?

Dealer 20 Groups are a collection of 20 non-competing dealers with similar business models who meet three times a year to exchange ideas, identify best practices, resolve challenges, and discover hidden opportunities. 20 Groups empower owners, managers, teams and dealerships to unlock their full potential. We are here to help you and your team thrive in the new economy. We facilitate change that matters for substantial value today and tomorrow. To join, call NIADA at (817) 640-3838.

EXECUTIVE DIRECTORS MESSAGE

Delinquencies on auto loans are on the rise with the escalating costs of inflation. Experian’s fourth quarter market report found a rise in delinquencies year-overyear. The amount of 30-day delinquencies rose from 1.86 percent to 2.31 percent. The 60-day delinquencies increased from 0.66 percent to 0.87 percent.

JOHN ODORISIO EXECUTIVE DIRECTOR MIDATLANTIC REGIONAL IADA

As I visit auctions and speak to our dealers, it is clear that while sales in general so far in 2023 have been good, acquiring the right inventory continues to be a struggle.

Being in auction management for many years, my feeling is that this predicament will continue for the foreseeable future.

Why do I say that? The main reason is that in years 2020 and 2021, less new vehicles were manufactured, which means a smaller inventory of used 2020 and 2021’s. While this will present a challenge, it is not unprecedented. The factories produced less vehicles in the years after the financial meltdown of 2008-2009 and many of us not only survived but thrived by getting creative and adjusting our business model. We overcame an inventory shortage before and we’ll do it again!

For those interested in a CPO program, please visit our website (mariada.org) and see what Superior Solutions has to offer all MidAtlantic IADA members. While you are there, take a look at the Safeguards Compliance Course we offer to ensure that your dealership is compliant with the FTC requirements to protect your customers‘ personal information. The FTC will begin enforcing this rule in early June and we’re told fines and penalties will be severe for those not compliant.

In the current market, a strong underwriting process is critical for buyhere, pay-here or lease-here, pay-here businesses. To help you develop a sound strategy for determining who to develop loans for, NIADA Senior 20 Group Moderator Bill Elizondo will lead a BHPH Underwriting Workshop April 13. The virtual workshop is 10 a.m. to 4 p.m., with a 30-minute lunch break. The cost is $395 for non-members. NIADA members and 20 Group members receive special pricing.

Elizondo has spent more than 30 years training and leading high-achieving sales teams, collections, and operations in the subprime and BHPH markets, including highly successful tenures with the nation’s largest publicly traded BHPH organization America’s Car-Mart and Superior Auto. His leadership and expert understanding of every BHPH discipline significantly improved operational performance at every stop.

During the course, attendees will learn the three strengths of good underwriting, procedures for verifying customer information and consistent decision-making, how to analyze the ability of customers to pay based on accurate financial data, and leveraging underwriting scoring models to help make tough decisions.

For a list of NIADA courses, visit niada.com/course-schedule. n

Telephone: 215

-860-

Rep. Schmitt (R-Blair) Reintroduces Wholesale Vehicle Auction Legislation

By Erik A. Ross, Senior Associate, Milliron & Goodman

On March 7, 2023, Rep. Schmitt-R reintroduced his legislation (House Bill 103) to modify the management of abandoned vehicles at auction and it was referred to the House Judiciary Committee. Last session, this legislation went through the House Transportation Committee so there will need to be a renewed effort to educate legislators and staff on this legislation.

Licensed wholesale vehicle auctions are a special class of private property owner. They handle thousands of dealershipowned vehicles every week that are bought and sold by licensed vehicle dealers to other vehicle dealers at the wholesale auction.

Vehicles are often abandoned by auto dealers; even vehicles valued at $20,000 or more. In some cases, it is because they simply go out of business. In other cases, they place a vehicle at auction for sale with no success. More often, they purchase them at auction and then do not transport them to their dealerships by the deadline. While current law has a process to address abandoned vehicles that are usually then salvaged, it doesn’t provide a way to address vehicles abandoned at wholesale auctions.

House Bill 103 (Schmitt-R) amends Title 75 (Vehicles), authorizing a wholesale vehicle auction, or salvor, to begin the process to remove vehicles that have been abandoned at the wholesale auction without the wholesale auction’s consent.

It would also authorize the wholesale auction to charge and collect storage

fees, as well as the releasing or recovering costs of the abandoned vehicle.

Specifically, the proposed legislation requires the wholesale vehicle auction to file a report, outlined in existing law at § 7311.1 (a), with the local police department declaring that an unauthorized vehicle has been left unattended on private property for a period exceeding three business days. If the wholesale vehicle auction elects to file such a report, it may remove, sell, or legally obtain the ownership and title of a vehicle that is declared an abandoned vehicle by PennDOT. The following shall apply:

• A wholesale vehicle auction that intends to sell or legally obtain ownership of an abandoned vehicle shall indicate that intention on the report filed.

• If the abandoned vehicle is unclaimed, the wholesale vehicle auction may submit an application for a certificate of title to PennDOT.

• If PennDOT determines that a new certificate of title should be issued, an abandoned branded title shall be issued to the wholesale vehicle auction.

• After the abandoned vehicle branded title is issued, the vehicle shall be offered for sale at auction by the wholesale vehicle auction. Notice shall be provided to prospective buyers that the title has been branded as a formerly abandoned vehicle.

The wholesale vehicle auction shall be reimbursed for all applicable costs related to the storage and processing of the vehicle from the proceeds of the sale of the vehicle. The remaining proceeds of the sale shall be paid to PennDOT and transmitted to the

State Treasurer for deposit in the Motor License Fund.

In addition, if the wholesale vehicle auction does not intend to sell or legally obtain ownership of an abandoned vehicle, existing law at § 7311.1 (c) (Salvors) provides that an abandoned vehicle can be towed to a salvor’s property and the salvor may elect to file a report with the local police department.

Again, when the abandoned vehicle has been transferred to a salvor and the vehicle is subsequently sold at auction, the legislation provides that:

• The salvor shall recover the appropriate costs of towing and storage.

• The wholesale vehicle auction shall be reimbursed for the cost of storing, providing notice, obtaining title, and processing related to the vehicle when the additional funds are available because of the salvor’s auction.

• The remaining proceeds of the sale shall be paid to PennDOT and transmitted to the state Treasurer for deposit in the Motor License Fund.

In this way, economic waste is avoided, and it encourages the dealers not to abandon their vehicles at the wholesale vehicle auction. In addition, licensed auctions entities are entrusted with these vehicles to auction between licensed dealer buyers and dealer sellers. This sale can reduce the loss of funds that come from unpaid storage fees and can potentially combat the cash for clunkers type of waste from older vehicles in which are most abandoned vehicles.

We will keep you apprised of legislative activity on this important legislation.

2023 is the year to Accelerate…accelerate your learning, access to lending, execution planning and compliance to help you reach your business goals and drive better profitability.

Connect with independent dealers from across the country to share ideas and best practices, while connecting with solutions providers that can help you access the products, services and resources you need to elevate your business results.

Learn from other independent dealers, NIADA 20 Group moderators and other industry leaders through general sessions, break-out sessions and service bays.

Meet with lending sources at the finance fair.

Get back to your dealership armed with tangible actions to accelerate your business.

Retaining Top Talent in Your Car Dealership

By Sean Toussi, Glo3D.com

Why Is Employee Retention Important in Car Dealerships?

Employee retention refers to an organization's ability to retain its employees for a prolonged period. It measures the extent to which employees remain with the organization over a certain period and the reasons why they stay or leave. A high employee retention rate indicates that employees are satisfied with their jobs and the workplace culture, while a low retention rate means a high level of employee turnover, which can be costly for the organization.

It is a critical issue for car dealerships since they face challenges in retaining their employees due to the competitive nature of the industry and the high demand for skilled workers. High turnover can result in lost productivity, decreased customer satisfaction, and increased recruitment and training costs. If employees are unhappy and leave frequently, it can create a negative perception among customers and the local community. Retaining skilled employees who are knowledgeable about the dealership's products and services can help differentiate the dealership from its competitors and provide a competitive advantage. Therefore, it is essential for dealerships to implement effective strategies to reduce employee turnover. Here are some strategies:

Competitive Compensation and Benefits

Competitive pay and benefits packages can help retain employees by making them feel valued and motivated. According to a recent survey by Cox Automotive, 68% of dealership employees

say that pay and benefits are the most critical factors in their job satisfaction. It includes providing a higher base salary, commission, bonuses, and benefits such as health insurance, retirement plans, and paid time off. Dealerships can also offer incentives for high performance to encourage employees to stay motivated and engaged. So, the top-performing salespeople can earn significantly more through commissions and bonuses.

Career Growth and Development

Many employees value the opportunity to learn new skills and advance their careers within a company.

Dealerships can offer training programs, mentorship, and promotional opportunities to help employees feel invested in their work and committed to the company. It is a win-win deal that contributes to the dealership's and its employees' overall success.

Providing career growth opportunities can be cost-effective compared to recruiting new staff. While some upfront costs may be associated with training and development programs, such as hiring trainers or investing in educational resources, these costs are generally lower than the costs of recruiting new staff. Hiring and onboarding new staff can include advertising, recruitment agencies, background checks, and other administrative expenses. According to a Center for American Progress study, the cost of replacing an employee can be as much as 20% of their annual salary.

In addition, new employees typically require training, and it may take several months to reach the productivity level of an experienced employee, which can result in lost sales and decreased customer satisfaction.

A Positive Work Environment & Culture

A positive environment can make employees feel more engaged and satisfied with their jobs. It can foster a sense of belonging, increase job satisfaction, and improve employee morale.

Also, emphasizing company culture and values can help to create a strong sense of community among employees. It involves promoting teamwork, collaboration, and inclusion initiatives to create a workplace that values all employees and promotes a positive culture. For instance, celebrating employee successes and employee of the month programs can help build a positive work culture and foster employee loyalty.

In conclusion, car dealerships can increase employee retention and build a robust and engaged workforce by offering competitive compensation and benefits, providing career growth and development opportunities, creating a positive work environment, and emphasizing company culture and values. n

If you have any questions or comments regarding this article, please email Sean@Glo3D.com; Glo3D.com Content Team (AI-based, Digital Merchandising, Virtual tour, Video Tour)

GET TO KNOW YOUR MID-ATLANTIC STAFF

John Odorisio, Executive Director (717) 317-3098 | john@piada.org

Nicole Autry, Dealer Set-Up Unit (717) 317-1966 | nicole@piada.org

Cynthia Slemons, Membership Specialist (717) 238-9002 x16 | cynthia@piada.org

Barbara Stake, Online Registration (717) 238-9002 x27 | barb@piada.org

Jessica Barton, Title Supervisor (717) 238-9002 | jessica@piada.org

India Thomas, Title Clerk (717) 238-9002 | india@piada.org

Tammy Farmer, Receptionist (717) 238-9002 x10 receptionist@piada.org

Heather Levesque, Accounting (717) 238-9002 | heather@piada.org

Amanda Seiders, Office Manager (717) 238-9002 | amanda@piada.org

In order to have such a formative working atmosphere, car dealerships need to offer incentives for good performance, foster open communication and feedback, and promote work-life balance.

CATALYTIC CONVERTER HIGHLIGHT

Report estimates 153K catalytic converter thefts

Catalytic converter thefts last year likely exceeded earlier estimates. According to new data compiled by CARFAX, there were approximately 153,000 thefts of catalytic converters throughout 2022. CARFAX derived the data by noting catalytic converter replacements in the millions of service and maintenance records it reviewed.

Throughout the nation, the thefts have been on the rise. The catalytic converters are targeted for their valuable metals — platinum, palladium, and rhodium. According to the National Insurance Crime Bureau, catalytic converter thefts reported in insurance claims increased sharply from 2019 to 2022. Some cities have reporting the thefts tripling in the past year.

The National Independent Automobile Dealers Association has worked with Congress on federal laws to combat the

thefts. In February, Senator Amy Klobuchar (D-MN) and Senator Mike Braun (R-IN), for reintroducing the “Preventing Auto Recycling Theft Act (PART).” The legislation aims to combat the issue of nationwide catalytic converter thefts.

The bill is the Senate companion to HR 621 introduced by Congressman Jim Baird (R-IN-4) Jan. 31. The PART Act provides a national framework to help law enforcement combat catalytic converter theft, requiring new vehicles to have unique, traceable identifying numbers stamped on catalytic converters during assembly. It also establishes a federal criminal penalty for the theft, sale, trafficking or known purchase of stolen catalytic converters of up to five years in jail.

CARFAX compiled a list of the most targeted vehicles by thieves — Ford F-Series pickup

trucks, Honda Accord, Toyota Prius, Honda CR-V, Ford Explorer, Ford Econoline vans, Chevrolet Equinox, Chevrolet Silverado, Toyota Tacoma and Chevrolet Cruze.

CARFAX also provided the following advice for car owners:

• Park in a well-lit area.

• Park in your garage if possible, instead of in the driveway or on the street.

• If you must park in a driveway, consider installing motion sensor security lights.

• Install a catalytic converter anti-theft device.

• Have a muffler shop etch your vehicle’s

Vehicle Identification Number (VIN) on the converter and spray it with a highly visible, high-heat paint. Doing so enables law enforcement to track converters, which in turn could lead police to the thieves. n

THE MIDATLANTIC REGIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION CONVENTION RETURNS

Rev Up Your Dealership’s Community Engagement

By Professional Mojo

Independent dealers and their dealerships are an essential part of a community, providing a valuable service by offering affordable, reliable vehicles to those who need them. However, simply existing in a community is not enough to establish a strong relationship with its members, leading to exemplary word of mouth, community loyalty and, most importantly, trust. To truly engage with their communities, independent dealers must go above and beyond by actively participating in community events and initiatives, providing valuable resources and support, and creating a welcoming environment.

SUPPORT LOCAL EVENTS

One way an independent dealership can engage with the community is by sponsoring local events. This could include sponsoring a community festival, supporting a charity walk or run, or hosting a car show. By sponsoring events, a dealership can not only gain exposure and brand recognition but also demonstrate its commitment to supporting the community. Additionally, sponsoring events can be an opportunity for dealership staff to engage with community members, answer questions about their business, and build relationships.

OFFER RESOURCES

Another way independent dealers can engage with their community is by offering resources and support to those in need. This could include partnering with local nonprofit organizations to provide transportation to individuals in need or hosting educational workshops on car maintenance and repair. By providing these resources and support, a dealership can establish itself as a valuable community resource and build trust with community members.

ROLL OUT THE WELCOME MAT

Independent dealers can also engage with their community by creating a welcoming environment. This means ensuring that all customers feel comfortable and respected when they visit the dealership. This could include offering language support for non-native speakers, ensuring accessibility for those with disabilities, offering refreshments, or having sales staff who are representative of the surrounding community. By intentionally developing a welcoming environment, a dealership can attract a diverse range of customers.

SUPPORT SHOP LOCAL

Another way independent dealers can engage with their community is by offering

incentives for customers to shop locally. This could include partnering with other local businesses to offer discounts or special promotions for those who purchase a car from the dealership. By encouraging customers to shop locally, the dealership can not only support other small businesses in the community but also establish itself as a community-minded business.

USE SOCIAL MEDIA

Finally, dealers can engage with their community by being active on social media. This means regularly posting updates on new inventory, promotions, and community events, as well as responding promptly to customer inquiries and feedback. By actively engaging with customers on social media, a dealership can establish itself as a responsive and customer-focused business and build a loyal following of satisfied customers.

Why not take a moment to reflect on how your dealership is regarded in the community? Even in the age of digital dominance, community engagement could make the very important (and costly) difference between a prospect choosing your car or the one from the lot down the road. Plus, it feels good to support the community that is supporting you. n

BE T TER, FASTER

As the nation’s leading provider of end-to-end wholesale vehicle solutions, Manheim is here to help you be more successful with the in-lane and online tools you need.

VISIT OUR MID-ATLANTIC LOCATIONS

Manheim Baltimore-Washington

Manheim Keystone Pennsylvania

Manheim New Jersey

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Manheim Philadelphia

Manheim Pittsburgh

The CARLAWYER©

By Eric Johnson, Partner in the law firm of Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery®

amounts; and charged payment processing fees that far exceeded the servicers’ costs for processing payments.

Here’s our monthly article on selected legal developments we think might interest the auto sales, finance, and leasing world. This month, the developments involve the Consumer Financial Protection Bureau and the Federal Trade Commission. As usual, our article features the “Case(s) of the Month” and our “Compliance Tip.” Note that this column does not offer legal advice. Always check with your lawyer to learn how what we report might apply to you or if you have questions.

FEDERAL DEVELOPMENTS

On March 8, the Consumer Financial Protection Bureau released a special edition of its Supervisory Highlights that addresses unlawful “junk fees” in the areas of deposit accounts, auto finance servicing, mortgage loan servicing, student loan servicing, payday lending, and small-dollar lending. The report focuses on violations of the law uncovered during the Bureau’s supervisory examinations completed between January 2022 and February 2023. With respect to auto finance servicing, CFPB examiners found that servicers assessed late fees in excess of the amounts allowed in consumers’ contracts; charged unauthorized late fees to consumers after their cars had been repossessed and their balances were accelerated; charged estimated repossession fees that far exceeded the actual cost of repossessions when allowing consumers to recover their vehicles after repossession by paying off the balance of the obligation or past due

On March 15, the Consumer Financial Protection Bureau issued a request for information seeking public comment, including data, analysis, research, and other information, on data brokers The Bureau also requests input from individuals who have interacted with or have been affected by data broker business practices. To assist commenters in developing responses, the RFI includes multiple questions that commenters may answer but stresses that the Bureau is interested in receiving any comments relating to data brokers. Comments are due by June 13, 2023.

On March 23, the Consumer Financial Protection Bureau filed a proposed order against Portfolio Recovery Associates, LLC, alleging that the company’s debt collection practices violated the requirements of a 2015 Bureau order and provisions of federal law, including the Fair Debt Collection Practices Act, the Consumer Financial Protection Act, and the Fair Credit Reporting Act Specifically, with respect to violations of the FDCPA and the CFPA, the Bureau alleged that PRA: collected on debts that consumers disputed without taking the required steps to substantiate the accuracy and validity of those debts; collected on debts without informing consumers that the debts were too old to legally enforce or report to a consumer reporting agency; when notifying consumers that they could be sued, failed to offer to provide consumers with certain required documents and failed to timely provide the documents it did offer; sued consumers when it lacked proper documentation about the debt; and sued to collect time-

barred debts. The Bureau also alleged that PRA failed to timely respond or reasonably investigate when consumers disputed debts, in violation of the FCRA and its implementing regulation, Regulation V. The Bureau also alleged that when PRA determined that a consumer’s dispute was frivolous or irrelevant, it failed to timely inform the consumer about what information would be necessary for it to investigate the dispute. If entered by the court, the order would require PRA to, among other things, pay at least $12 million to consumers harmed by the alleged illegal collection practices and pay a $12 million penalty to the Bureau.

On March 23, the Federal Trade Commission proposed a rule making it easier for consumers to “click to cancel” recurring subscriptions and memberships. The proposal would make several specific changes, including implementing: (a) a simple cancellation mechanism; (b) new requirements before making additional offers; and (c) new requirements regarding reminders and confirmations. The FTC developed a fact sheet that explains the proposed changes to the FTC’s Negative Option Rule. Comments are due on or before 60 days after publication in the Federal Register.

On March 24, the FTC announced the lifetime industry ban for operators of an alleged “Extended Vehicle Warranty” scam. The FTC announced that three companies and their owners that it had charged with running the operation that allegedly scammed consumers out of millions of dollars would be permanently banned from participating in the extended automobile warranty market, as well as from any further involvement in outbound telemarketing. The orders also include a monetary judgment of $6.6 million, which is largely suspended based

on their inability to pay. If the defendants are found to have lied to the FTC about the financial status, the full judgment would be immediately payable.

CASE(S) OF THE MONTH

Federal Court Did Not Have Personal Jurisdiction over Online Seller of Vehicle Where Seller Had Insufficient Contacts with Forum State:  A Missouri resident viewed a used truck for sale on an Oklahoma dealership’s website and paid a $500 deposit to hold the truck. He drove from Missouri to Oklahoma and purchased the truck “as is” with no dealer warranty. The buyer experienced numerous mechanical problems with the truck after the purchase. He sued the dealership and its owner in Missouri state court, alleging claims arising out of the sale of the vehicle.

The dealership removed the action to the U.S. District Court for the Western District of Missouri, asserting diversity jurisdiction. The dealership then argued that the federal court did not have personal jurisdiction over it as an Oklahoma resident and moved to dismiss. The court granted the dealership’s motion. The court noted that specific personal jurisdiction can be exercised by a federal court in a diversity suit only if authorized by the forum state’s long-arm statute and permitted by the Due Process Clause of the Fourteenth Amendment. First, the court concluded that Missouri’s longarm statute authorized specific personal jurisdiction over the dealership because there was sufficient evidence that the dealership transacted business in Missouri and/or committed a tort in Missouri. With respect to transacting business, the court found that the dealership’s sale of a vehicle to a resident of Missouri after he viewed the truck on its website and made a deposit might be considered the transaction of business for purposes of the long-arm statute. With respect to the commission of a tort in Missouri, the buyer sufficiently alleged that the dealership violated the Missouri Merchandising Practices Act by failing to disclose or misrepresenting

the defects in the truck. However, the court concluded that specific personal jurisdiction was not authorized by the Due Process Clause where there were insufficient minimum contacts with the forum state, Missouri. The court found no evidence that the dealership’s website was directed to potential purchasers within Missouri or that the dealership entered into contracts in Missouri or shipped vehicles to Missouri. In addition, the court noted that the dealership did not create continuing warranty obligations when it sold the vehicle to the buyer, where the truck was sold “as is” with no dealer warranty.  See  Gomez v. Truck Shop, LLC, 2023 U.S. Dist. LEXIS 27945 (W.D. Mo. February 17, 2023).

COMPLIANCE TIP

Our Case of the Month highlights a very fortunate “win” for this dealer. As you can see, the facts surrounding the dealer’s website, its advertisements and the transaction itself were scrutinized by the court in its determination as to whether the federal court had personal jurisdiction over it as a resident of another state. In this case, the court concluded that specific personal jurisdiction was not authorized by the Due

Process Clause where there were insufficient minimum contacts by the dealership with the forum state, Missouri. The court also looked at the dealerships website and didn’t find any evidence that it was directed to potential purchasers within Missouri, or that the dealership entered into contracts in Missouri, or shipped vehicles to Missouri. Very fortunate facts for this dealership. But, if the dealership directed its website or advertisements to consumers in another state, or entered into a contract in the other state, or shipped vehicles to the other state, would the result have been different? If you’re engaged in these types of activities, it’s time to buy your friendly compliance counsel a cup of coffee and discuss!

So, there’s this month’s roundup! Stay legal, and we’ll see you next month. n

Eric

(ejohnson@hudco.com)

is a Partner in the law firm of Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery®, a monthly legal newsletter for auto dealers and a contributing author to the F&I Legal Desk Book.  For information, please visit www.counselorlibrary.com. ©CounselorLibrary.com 2023, all rights reserved. Single publication rights only to the Association.  HC# 4867-9946-0954.

AUCTION DIRECTORY

PENNSYLVANIA

ADESA MERCER

758 Franklin Road, Mercer, PA 16137 724.662.4500 / Fax: 724.662.8716

Friday 9:00 AM

Office M-W: 9-4:00; TH: 9-5:00; F: 8-5:00 adesa.com

ADESA PA

I-83 Ex. 28 (Old Ex. 12), 30 Industrial Rd. York, PA 17406

717.266.6611 / Fax: 717.266.7650

Wednesdays 9:00 AM; INOPS 8:30 AM

Specialty Sale every 4th Wed 8:30 AM adesa.com

ADESA PITTSBURGH

378 Hunker Waltz Mill Rd. New Stanton, PA 15672

724.925.4700 / Fax: 724.925.4701

Tuesday 9:00 AM pittautoauction.com

AMERICA'S AA - HARRISBURG

1100 S. York St., Mechanicsburg, PA 17055 717.697.2222 / Fax: 717.697.2234

Thursday 8:45 AM harrisburgautoauction.com

AMERICA’S AA - LANCASTER

1040 Commercial Ave., P.O. Box 406 East Petersburg, PA 17520 717.569.5220 / Fax: 717.569.3109

Wednesday 9:00 AM; INOPS 8:30 AM americasautoauction.com

AMERICA’S AA - PITTSBURGH

55 E. Buffalo Church Rd. Washington, PA 15301 724.225.1777 / Fax: 724.225.7223

Thursday 12:30 PM americasautoauction.com

America’s AA – Erie

P.O. Box 317, 12141 Route 6 West Corry, PA 16407 814.664.7721 / Fax: 814.664.7724

Thursday 10:00 AM

3 Lanes Dealer Consign, Fleet/Lease americaserie.com

BLAISE ALEXANDER AUCTION

350 Fairfield Rd., Montoursville, PA 570.435.8391

Mondays: 10:45am blaisealexanderauction.com

BLOOMSBURG AUTO AUCTION

25 Ridge Road, Bloomsburg, PA 17815 570.784.2306

Wednesday 10:00 AM bloomaa.com

CAPITAL AUTO AUCTION

5135 Bleigh Ave., Philadelphia, PA 19136 215.332.2515

Monday thru Friday 9:00 AM - 4:30 PM capitalautoauction.com

CENTRAL PENNSYLVANIA AA

Exit 178 of I-80, Lock Haven, PA 17745 800.248.8026 / Fax: 570.726.7841

Thursday 9:45 AM

Office: MTF 8-5:30 W-Th 8-6:00 cpaautoauction.com

GARDEN SPOT AUTO AUCTION

Robert Rd. & Apple St., Ephrata, PA 17522 717.738.7900 / Fax: 717.738.7930

Tuesday 10:00 AM gardenspotautoauction.com

GREATER ERIE AUTO AUCTION

7700 Avonia Road, (Exit 16 of I-90 & PA Route 98) Fairview, PA 16415-0916 814.474.3900 / 877.474.GEAA

Fax: 814.474.4969

Tuesday 1:45 PM greater-erie.com

LEHIGH VALLEY AUTO AUCTION

3880 Lehigh St., Whitehall, PA 18052

610.435.5554 / Fax: 610.435.5557

Wednesday 5:00 PM lehighvalleyautoauction.com

MANHEIM KEYSTONE

488 Firehouse Road, Grantville PA 17028 717.469.7900 / Fax: 717.469.2842

Every Monday 11:00 AM manheim.com

MANHEIM PENNSYLVANIA

1190 Lancaster Rd., Manheim, PA 17545 717.665.3571 / Fax: 717.665.9265

Exotic Highline Sales every other

Thursday - 9:00 AM

Every Friday Sale 8:30 AM manheim.com

MANHEIM PHILADELPHIA

2280 Bethlehem Pike, Hatfield, PA 19440 215.822.1935 / Fax: 215.822.8140

Tuesday 9:30 AM

TRA Sale - Tuesday 12:30 PM Office: M-Th 8:30-5:00; F 8:30-1:00 manheim.com

MANHEIM PITTSBURGH AA

21095 Route 19, Cranberry Twp., PA 16066 724.452.5555 / Fax: 724.452.1310

Wednesday 9:00 AM manheim.com

NORTH EAST PENNSYLVANIA AA

860 N. Keyser Ave., Scranton, PA 18504

570.207.CARS / Fax: 570.207.1860

Tuesday 10:00 AM

nepautoauction.com

PERRYOPOLIS AUTO AUCTION

Route 51 S. Perryopolis, PA 15473

800.735.5288/ Fax: 724.736.0466

Friday 9:45 AM

perryautoauction.com

MARYLAND

BSC AMERICA/BEL AIR AUTO AUCTION

P.O. Box 200, 4805 Philadelphia Rd. Belcamp, MD 21017

410.879.7950 / Fax: 410.893.1515

Thursday 8:30 AM at Clayton Station

Thursday 8:00 AM at Bel Air in Belcamp bscamerica.com

MANHEIM BALTIMORE-WASHINGTON

7120 Dorsey Run Rd., Elkridge, MD 21075 410.796.8899 / Fax: 410.799.0512

Tuesday Sale, 9:30 AM

Tuesday Frontline Sale, 9:00 AM

TRA/Salvage, 1:00 PM manheim.com

NEW YORK STATE LINE AUTO AUCTION 830 Talmadge Hill Rd. S. Waverly, NY 14892

607.565.8151 / Fax: 607.565.3915

Ally Financial Open Sale –EVERY FRIDAY, 9:20 AM

GM Financial Open Bi-weekly. Simulcast in all lanes. statelineauto.com

WEST VIRGINIA

MOUNTAIN STATE AUTO AUCTION

Route 2, Box 835, Shinnston, WV 26431 304.592.5300 / Fax: 304.592.3510

Monday 10:30 AM Office: 9:00-5:00 mtstateaa.com

PUBLIC AUCTIONS

CAPITAL AUTO AUCTION

5135 Bleigh Ave., Philadelphia, PA 19136 215.332.2515 / Fax: 215.332.2534

capitalautoauction.com

CAPITAL AUTO AUCTION

5001 Beech Rd, Temple Hills, MD 20748 301.316.4980 / Fax: 301.316.4982

capitalautoauction.com

WHY WAIT?

You can get DEALER TITLES processed ON THE SPOT or within 24 hours!

You can get SALVAGE TITLES processed ON THE SPOT or within 24 hours!

You can get your PAPERWORK processed ON THE SPOT or within 24-48 hours!

At our offices! M-F: 9am-2pm 1501 North Front Street Harrisburg, PA 717-238-9002

YOUR MEMBERSHIP PAYS FOR ITSELF!

More specifically, the benefits of the MidAtlantic IADA membership include many helpful services, products, educational courses, national representation and much more!

REMINDER

2023 Dealer Discount Book

As a MidAtlantic IADA member, you will receive the 2023 Dealer Discount Book valued at over $20,000 worth of coupons with your membership.

Use your coupons at two or three participating auctions per year or sell service contracts for the participating warranty companies. You will more than get back your annual dues to MidAtlantic IADA.

NICB Reports Vehicle Theft on the Rise

Americas favorite truck is also the country’s most stolen vehicle; the Ford F-150 takes top spot on the NICB’s list of the most stolen vehicles in the U.S.

The National Crime Insurance Bureau is offering updates regarding the rising crime affecting the auto industry. From auto theft to widespread swiping of catalytic converters, the challenges for businesses have been daunting. Vehicle crime is certainly still a major issue across the nation and there are many reasons for this. NICB data does not point to one specific trend to attribute to the rise in vehicle crime. Many criminals steal vehicles to commit other crimes, and sometimes vehicles end up in chop shops, get shipped overseas, or cross the border into Mexico.

These thefts are currently considered property crimes, so there is very little deterrent effect. NICB believes it is critical to re-invest in law enforcement, support community engagement and policing programs, and implement early intervention programs to help reduce crime.

“Over one million vehicles were stolen nationwide in 2022,” said NICB President and CEO, David J. Glawe. “States that saw the largest increase in vehicle thefts were Illinois (up 35%), Washington (31%), and New York (23%). “Organized gangs and juveniles steal vehicles and use them to facilitate other crimes. To stop this lawless behavior, we must re-invest in our law enforcement partners, support community engagement and policing programs, and implement successful early intervention programs for at-risk youth.”

The 5 most stolen vehicles in 2021 according to NICB data:

• In 2019, the Ford pickup truck took the top spot, with almost 39,000 reported thefts. The 2006 model year has the highest reported thefts among the Ford

By Jeffery Bellant

Pickup.

• The Honda Civic is the second most stolen vehicle, with over 30,000 thefts reported in 2019, and the 2000 model year proving to be the most desirable.

• Rounding out the top five most stolen cars are the full-size Chevrolet pickup truck, the Honda Accord and the Toyota Camry.

Catalytic converter theft continues to be a major issue across the country. These thefts increased dramatically in 2021, and NICB noted 52,206 thefts in 2021, an increase of 1,215% since 2019, and up 203% since 2020. As a note, our data is not a reporting of all cat converter thefts nationally. In 2023, NICB would anticipate at least 11 states to introduce new legislation to either establish new regulations on scrapyards, strengthen current regulations, increase penalties, and/or address problems identified with recently enacted laws. The 11 states NICB anticipates seeing legislation are: Idaho, Kansas, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, North Dakota, South Carolina, Texas, and Wyoming.

NICB sampled member company claims data to identify catalytic converter theft trends. Its analysis is not a reporting of all thefts. As it pertains to catalytic converter thefts, the following are the top 5 states for thefts:

i. California

ii. Texas

iii. Washington

iv. North Carolina

v. Minnesota

California reported the most catalytic converter thefts in 2021, accounting for 37% of all cat converter thefts. NICB data shows a strong correlation between catalytic converter theft trends and the value of the precious metals. Catalytic converters contain high-value precious metals, specifically rhodium, palladium, and platinum. The values of these metals have skyrocketed and currently are

averaging:

• Rhodium: $10,700

• Palladium: $1,568

• Platinum: $1,010

Though the value of the metals contained in catalytic converters is high, thieves will often receive $50-to-$250 per catalytic converter they turn into recycling facilities.

Typically, thefts of catalytic converters tend to be from bigger vehicles like large pickups and delivery vehicles. These trucks are targeted due to higher clearance and therefore easier to get to the catalytic converter. These vehicles are often used as fleet vehicles, which often attract thieves as company trucks are usually stored in yards and are left unattended overnight allowing a criminal to go in and remove a few in very short order. Hybrids are also a major target as these vehicles contain two catalytic converters, as well as the fact that as a hybrid, these converters tend to see less wear and (corrosion) than those of other vehicles with equal miles, and therefore are more valuable to thieves.

In the past two years, 32 states (22 states in 2022 & 10 states in 2021, Indiana both years) have enacted new laws or amended their current laws to combat catalytic converter theft. Some states already had great laws on the books prior to 2021. The states without any laws can be a problem, but thankfully this number continues to drop.

At the federal level, Congressman Jim Baird (Indiana) introduced the “Preventing Auto Recycling Theft Act.” This act is intended to reduce catalytic converter thefts by marking identifying information on the converters, addressing how the parts are purchased, and strengthening enforceability of catalytic converter theft for local law enforcement. The National Insurance Crime Bureau worked closely with Congressman Baird in the development of this legislation and supports the Preventing Auto Recycling Theft Act. n

Access to Auto Credit Tightens

In announcing another interest rate hike recently, Federal Reserve Chair Jerome Powell said access to credit is expected to tighten due to ongoing concerns in the banking industry, including the failures in multiple banks.

Even before the latest hike of 25 basis points, it appears credit began tightening.

According to Cox Automotive’s preliminary data on auto credit access from the first half of March released in a recent Auto Market Weekly Summary, there was “the widening of yield spreads and shortening of terms.”

This reversed the trend found in Cox Automotive’s Dealertrack Auto Credit Total Loan Index from February. Credit had loosened in February from the previous month, with approval rates up 0.2 percentage points.

Auto loan performance continues to decline, with delinquencies rising for 10 straight month. Cox reported that 60-day delinquencies are up 21.9 percent from a year ago.

“In February, 1.90 percent of auto loans were severely delinquent, an increase from 1.89 percent in January and the highest severe delinquency rate dating back to 2006,” said the Cox Automotive Auto Market Weekly Summary. “Compared to a year ago, the severe delinquency rate was 32 basis points higher. In February, 7.34 percent of subprime loans were severely delinquent, an increase from 7.30 percent in January and the highest severe

delinquency rate dating back to 2006. The subprime severe delinquency rate was 135 basis points higher from a year ago. Higher delinquencies are still not leading to pre-pandemic levels of defaults, but defaults are increasing. Loan defaults increased 2.2 percent in February from January and were up 16.2 percent from a year ago.”

With the latest federal rate hike, the new target range is 4.75 to 5 percent. It was the ninth rate increase in the past year and second straight hike of a one-quarter of a point. Previous hikes ranged from three-quarters to half a point.

The impact of the rate hikes have already been felt in the automotive industry. According to Experian’s State of Automotive Finance Market Fourth Quarter report released earlier this month, used car interest rates increased from an average of 8.22 percent at the end of 2021 to 10.26 at the close of 2022. The average monthly payment topped $526, up $11 from the third quarter, even though the amount financed was down $766 to $27,768.

Consumers have also stretched out terms to make vehicles more affordable. The average term increased to 68.01 months, up from 67.35 at the end of 2021. It’s more than two months longer than the average term at the end of 2020.

Used car prices remain much more affordable than new vehicles. The average new car payment rose to $716, with $41,445 financed. The average new car rate is at 6.07 percent with the average term at 69.44 months. n

Take Advantage of the MARIADA SAFEGUARDS COMPLIANCE Course MAKE THE DEADLINE: JUNE

9

Ensure your staff knows how to protect consumer information to comply with the FTC requirements, and avoid inadvertent exposure of your customer’s information, government enforcement actions, lawsuits, and bad press.

This course covers the requirements for the Safeguards Rule’s “qualified individual” and the Privacy Rule of the Gramm-Leach-Bliley Act. Information covered includes, but is not limited to, data breach response, data retention, and disposal, and use of nonpublic personal information. The following model policies are included within the course: Dealership Privacy Policies and Information Security Standards, Employee Agreement to Comply with Privacy Policies and Information Security, and Vendor Agreement to Maintain Confidentiality.

2023 ADVANCED ISSUING AGENT TRAINING COURSES

IN-PERSON COURSES ZOOM COURSES

The in-person training courses will be provided by Pennsylvania Association of Notaries, a PennDOT approved instructor. All classes begin at 9:00AM. No refunds and may not be transferred to another class date.

Members: $125; Non-members: $150

Thursday, June 15

Deadline to register: May 31

NORTHEAST PENNSYLVANIA AA

860 N. Keyser Ave.

Scranton, PA 18504

Thursday, September 21

Deadline to register: September 6

MANHEIM

PHILADELPHIA AA

2280 Bethlehem Pike Hatfield, PA 19440

ONLINE COURSES

Thursday, October 5

Deadline to register: September 20

GARDEN SPOT AA Robert Rd. & Apple St. Ephrata, PA 17522

The ZOOM training courses will be provided by Pennsylvania Association of Notaries, a PennDOT approved instructor. All classes begin at 9:30AM. Class size limited – registration closes ten business days prior to class date.

No refunds and may not be transferred to another class date.

Members: $99; Nonmembers: $129

Thursday, July 20

Deadline to register: July 5

The online training courses will be provided by Pennsylvania Association of Notaries, a PennDOT approved instructor.

Members/Nonmembers: $169

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MARYLAND FORMS DEALERS CAN ORDER

PENNSYLVANIA FORMS DEALERS CAN ORDER

1 – 4 packs = $10.00

5 – 10 packs = $15.00

Over 10 packs – Please call ahead for pricing.

ADP FORMS

Card Exp. Date________

Card Number _____________________________________ Security Code________

We cannot process orders until payment is received.

Signature ____________________________________________ Date

For questions you may contact Cynthia Slemons at 717.238.9002 ext. 16 or Cynthia@piada.org .

FOR

INFORMATION ON

MIDATLANTIC IADA = PIADA + MDIADA + DEIADA

Contact Cyndi at 717-238-9002 x16 Cynthia@piada.org

Please make checks payable to PIADA, 1501 North Front St., Harrisburg, PA 17102 (call in to receive shipping cost to include in payment) or you may fax orders to 717.238.3870 with credit card information. *All orders MUST be accompanied by a method of payment. *Must provide DIN if applicable.